My customer has submitted an affidavit for "not endorsed as drawn or missing endorsement". Checks payable to business and endorsement has it being payable to an individual (i.e. Pay to the order of _________ followed by this person's signature then Business Owner's signature and name of business or vice versa - some do not reference business name, only has illegible signature and then pay to info).
When branch submitted to operations folks to submit to BOFD, they responded that the payee must be the one making the claim.
This is the second time the customer has submitted the same claim (additional check on this claim). Last year, the same thing happened.
Branch was to obtain payee contact info so we could get new affidavit or something to indicate he never received payment. Turned out the business was not legitimate, did not complete the work and customer filed police report.
Just found out yesterday that he took the BOFD to court and lost the case, which is when he filed the second affidavit. According to what he told the Branch Mgr, the judge told him to sue us because it was our fault the items paid. I'm at a complete loss as to how to respond to this claim at this point. I think we should respond in writing and include UCC references and whatever other banking regulation reflects banking expectations in this type scenario for the paying bank. Anyone able to give me some suggestions/guidance? Thanks in advance!!